Penalty under Section 111 & 112 of Customs Act, 1962 whether can be imposed on DEPB licence broker when broker involved in transaction pertaining to sale of forged license.

PJ/Case Laws/2011-12/1462

Case: COMMISSIONER OF CUSTOMS V/S SANJAY AGRAWAL

Citation: 2011(269) E.L.T. 153 (GUJ.)

Issue:- Penalty under Section 111 & 112 of Customs Act, 1962 whether can be imposed on DEPB licence broker when broker involved in transaction pertaining to sale of forged license.

Penalty for forging of DEPB licence – Jurisdiction lies with DGFT and not with Customs Authorities.

Brief Facts:- Investigation was started in respect of imports made by one M/s. Abhiman Export against DEPB licenses. It was found that DEPB license No. 510031451 and 0510033328 dated 5.2.2001 and 8.3.2001 respectively, allegedly issued by Joint Director General of Foreign Trade (DGFT), new Delhi were forged. M/s. Abhiman Export had sold the forged DEPB licenses in the market which were purchased by one M/s. Rajshanti Metals Ltd. M/s. Rajshanti metals filed various Bills of Entry claiming exemption from customs duties vide customs Notification No. 34/97 dated 7.4.1997.

On the basis of the above referred DEPB licences, the goods were cleared by granting exemption. According to CEO of M/s. Rajshanti Metals Ltd., DEPB license and related release advance had been collected by their CHA M/s. Prime forwarders on their behalf from Shri Sanjay Agarwal of Rimu International, the respondent herein.

Department issued Show cause notice dated 24.9.2001 to respondent and the demand was confimed and inter alia, penalty of Rs. 712331/- was imposed on respondent under Section 112 of the Customs Act, 1962.

Being aggrieved, respondent preferred separate appeals before the Commissioner (Appeals) in relation to each of the two DEPB licenses, which came to be allowed on the ground that the respondent was only a co-noticee whereas the appeal of the main party M/s. Rajshanti Metals, Jamnagar, had been allowed by the Commissioner (Appeals).

Revenue filed appeal before the Tribunal which was rejected.

Hence, Revenue has filed appeal before the High Court.

Appellant’s Contention:- Revenue stated that the order of Commissioner (Appeals) allowing the appeal of M/s. Rajshanti Metals Ltd was challenged by them before the Tribunal and was allowed. The respondent had acted as broker in relation to the purchase of the said DEPB license by M/s. Rajshanti Metals Ltd., which license were found to be fake and forged. Hence the involvement of the broker in the transaction pertaining to sale of forged licenses was evident. In the circumstances the Tribunal was not justified in upholding the order of Commissioner (Appeals). It is also submitted that the decision of the Tribunal in the case CC, Mumbai Vs. M.D. Corporation [2001 (127) E.L.T. 270 (Tri.-Mumbai)] on which reliance has been placed by the Tribunal has been challenged by the Revenue and has not attained finality and as such the Tribunal ought not to have relied upon the said decision.

Reasoning of Judgement:- The High Court noted that the Tribunal in its order had held that the case of CC, Mumbai v. M.D. Corporation but it has also found that the original adjudicating authority while imposing penalty upon respondent, has not discussed his role at all and not given clear, finding against him. It is in these circumstances that the Tribunal did not find any reason to impose penalty upon the respondent, who had acted as a broker.

The High Court held that the facts showed that allagetaion against respondent was with regard to his alleged involvement in the transfer of forged DEPB licenses. The transfer of a DEPB licence precedes the clearance of goods on the basis of the same. Insofar as the customs authorities are concerned they come into the picture at the stage of clearance of goods. Insofar as transfer of DEPB licences and the validity or otherwise of the same, it is the DGFT authorities who are the concerned authorities. Forgery of DEPB licence may entail prosecution under the ordinary criminal law or under any other provision of the EXIM Policy under which the DEPB licences are issued. Hence, any infringement of law in relation to DEPB licences would fall solely within the domain of the DGFT and it is they who are competent to take any action in respect thereof. The Customs Authorities are not competent to take action in relation to forgery of or validity of a DEPB licence. They are concerned with the clearances of the goods; hence if goods are cleared under cover of fake licences, they can take action against those involved in clearance of the goods under cover of the fake licence.

The High Court noted that the Order-in-Original indicated that respondent has been held liable for committing acts which rendered the imported goods liable for confiscation under, Section 111(o) and consequently, has been held liable for penal action under Section 112(a) of the Act.

The High Court perused the provisions of Section 111 and Section 112 and held that Section 111 of the Act, which provides for “Confiscation of improperly imported goods, etc.” lays down the modes of importing goods brought from a place outside India which would render the goods liable to confiscation. In view of the provisions of Clause (o) thereof, any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under the Act or any other, law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer, would be liable to confiscation. Thus Section 111 of the Customs Act comes into play provided the goods are brought from a place outside India by adopting any of the modes specified thereunder so as to render the goods are liable to confiscation.

It was held that Section 112 provides for penalty for improper importation of goods, etc. Thus any person who acts or omits to do any act in relation to goods so as to render such goods liable to confiscation under Section 111 or acquires possession of or deals with goods in the manner provided under clause (b) of Section 112 would be liable to penalty as laid down thereunder. Thus, both, Section 111 and Section 112 of the Act operate in relation to improper importation of goods.

On the facts of the Case, the High Court it was alleged against the respondent that he had been involved in transaction pertaining to purchase of DEPB licenses by M/s. Rajshanti Metals Ltd. The DEPB licence was found to be forged after clearance of goods. The alleged act of respondent cannot be said to be an act or omission pertaining to improper importation of goods. Section 111 and 112 of Customs Act, 1962 would not be attracted so as to vest the Customs Authorities with the power to take action against the present respondent in connection with his alleged involvement in the purchase of the DEPB licences. Insofar as the Customs authorities are concerned, they are competent to take action against such persons who have used the forged DEPB licences to import goods, which would result in improper importation of goods as laid down under Section 111, and consequently would fall within the purview of Section 112 of the Act.

No infirmity in order of the Tribunal.

Decision:- Appeals dismissed.

Comments

PJ/Case Laws/2011-12/1462

Post a Comment

Query